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					   P R M C A N D I D AT E G U I D E B O O K
   C E R T I F Y I N G O N LY T H E B E S T I N T H E R I S K P R O F E S S I O N




www.PRMIA.org
                    CONTENTS

                    3    EXECUTIVE SUMMARY


                    4    PROGRAM DESIGN


                    6    PROGRAM DATES AND LOCATIONS


                    7    FEES AND REGISTRATION


                    8    TAKING THE PRM EXAM


                    10 PRM SYLLABUS


                    13 PREPARING FOR THE PRM EXAM


                    15   FREQUENTLY ASKED QUESTIONS



    www.PRMIA.org



2                               GUIDE TO THE PROFESSIONAL RISK MANAGER EXAM
    EXECUTIVE SUMMARY
    The PRM program is a series of evaluation exams, designed for the development of
    professional risk managers. Endorsed by leading university programs and industry firms,
    it is the global standard for risk management professionals.

    Built by a broad coalition of industry leaders to reflect the mission objectives of the asso-
    ciation and to establish the leading form of education, validation and certification in the
    Risk Management profession, the PRM counts candidates from over 95 countries, more
    than any other risk certification program, anywhere.

    The learning objectives for the PRM designation are to demonstrate knowledge and
    understanding of:
           I   the classic finance theory underpinning risk management
           I   the foundations of risk measurement
           I   the foundation of option theory
           I   financial instruments and their associated risks and uses
           I   the daily form and function of trading markets
           I   risk management best practices
           I   lessons learned from failed systems and practices and major risk events
           I   best practices of governance, conduct and ethics


    PRM EXAMS
    To meet with the needs of busy professionals, the program provides for great flexibility,
    offering one six-and-one-half-hour sitting for those wishing to complete evaluation in one
    day, or four separate exams, varying in length from one to two hours, which can be taken
    in any order over a period of up to two years. Passing all four exams leads to the award of
    the PRM designation.

     Exam         Exam Name                                 No. of Questions     Time Allowed

       I          Finance Theory, Financial Instruments            36               2 hours
                  and Markets

       II         Mathematical Foundations of Risk                 24               2 hours
                  Measurement

      III         Risk Management Practices                        36              1.5 hours

      IV          Case Studies; Standards: Governance,             24               1 hour
                  Best Practices and Ethics


    CROSS-OVER REQUIREMENTS FOR OTHER DESIGNATIONS
    The program also recognizes the achievements of those who have other professional
    designations and gives partial credit towards completion of the requirements for the
    PRM designation. “Cross-over” candidates must pass the following exams:
    CFA Cross-over                                     Exams III and IV
    CIIA, CEFA Cross-over                              Exams III and IV
    Actuarial Fellow Cross-over                        Exams III and IV
    CQF Cross-over                                     Exams III and IV
    Actuarial Associate Cross-over                     Exams I, III and IV                          www.PRMIA.org
    CSI Financial Risk Manager Cross-over              Exams II, III and IV
    CAIA Cross-over                                    Exams II, III and IV

EXECUTIVE SUMMARY                                                                                                   3
                    PROGRAM DESIGN
                    The Professional Risk Manager program has been designed for those:
                      I   seeking professional certification
                      I   looking to develop their skills or those of their staff
                      I   looking for skills assessment of current employees
                      I   looking for skills assessment of potential employees
                      I   looking to communicate their knowledge and understanding of risk
                          management at a higher level to external and internal parties

                    The subject matter for the PRM program has been chosen based on relevance as well as
                    the ready availability of literature on the specific subjects.

                    Because we are a diverse association, with members from more than 175 countries, from
                    a variety of disciplines and varying areas of interest, the members of the Education and
                    Standards Committee along with our Academic Advisory Council have taken the job of
                    creating the framework to help us meet both the demands of current members as well as
                    developing the flexibility to grow and change together with our industry. Specifically, the
                    program has been designed with four of our mission objectives in mind:


                    TO BE A LEADER OF INDUSTRY OPINION AND A PROPONENT FOR
                    THE RISK MANAGEMENT PROFESSION
                      I   By setting the higher standard in risk certification, we create standards of practice
                          and accountability that will define what Professional Risk Managers represent to
                          their colleagues and employers.


                    TO DRIVE THE INTEGRATION OF PRACTICE AND THEORY
                      I   Neither theory nor practice will successfully develop to their potential without a
                          strong interaction between professionals in each area. The Professional Risk
                          Manager program contains subject matter drawn from risk management theory,
                          finance theory, the math underpinning risk measurement and applied question
                          matter from the practices of our profession. We will directly test for knowledge of
                          Finance and basic Math. Such knowledge is essential for risk managers as it forms
                          the foundation of risk measurement and management.

                      I   We will also test for practical knowledge about markets: trading practices, intermedi-
                          aries, settlement and other conventions in specific markets. These market choices
                          will reflect the most global of markets as well as some more narrowly defined mar-
                          kets, with the latter giving us the opportunity to expose people to markets in which
                          they may not normally be active.

                      I   Finally, to test for broad understanding of important risk management lessons, we
                          have included a section based on the time-tested case-study approach to learning.
                          Narratives of historical incidents where critical risk management issues have arisen
                          give us the opportunity to conduct a sort of pathology of events from around the
                          globe and to test members’ understanding of their root causes.




    www.PRMIA.org



4                                                                                                   PROGRAM DESIGN
    TO BE GLOBAL IN OUR FOCUS, PROMOTING CROSS-CULTURAL
    ETHICAL STANDARDS, SERVING EMERGING AS WELL AS MORE
    DEVELOPED MARKETS
     I   Candidates for the PRM program come from more countries than any other risk
         certification program, anywhere!

     I   The content of the PRM program is designed to be geographically neutral. Specific
         sections focusing on “markets” are designed so that a variety of markets and market
         lessons will be studied.

     I   The PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct)
         represents the standards of behavior that Professional Risk Managers promise to
         their colleagues and employers. It has been written to cut across geographic and
         cultural boundaries. All Professional Risk Managers will be required to study the
         Code for the program and adhere to it to stay in good standing as a certified PRM.

     I   The PRMIA Governance Principles delineate seven key principles to best practice cor-
         porate governance, all gleaned from governance documents developed by leading
         public and private entities from around the world.


    TRANSPARENT, NONPROFIT, INDEPENDENT, MEMBER-FOCUSED
    AND MEMBER-DRIVEN
     I   PRMIA is a non-profit professional association under the full control of its members.
         It does not have for-profit subsidiaries that may financially benefit individuals. Its
         bylaws provide strong protection for member rights and the assets of the member-
         ship. We are “of the risk professional, by the risk professional and for the risk
         professional.”

     I   The program has been designed by industry leaders, all PRMIA members. Any
         PRMIA member can submit questions for possible inclusion on the exams. Those
         submissions go through a quality control screening by a number of members of
         the Education and Standards Committee and, if approved, will make it to our exam
         question database. By emphasizing peer input and peer review, this approach sets
         a standard of measurement created by the industry.

     I   Candidates will study the Bylaws of PRMIA, so that they are familiar with our
         structure and codification of member-leadership.




              Be sure to read this entire document to view important
            information that will help you to be a successful candidate.
                We hope that you will join us in promoting the PRM
               program as the standard for our industry and that you
               will join in our efforts to ensure that it will continue to
                 meet the needs of our members and our industry.
                                                                                                  www.PRMIA.org



PROGRAM DESIGN                                                                                                    5
                    PROGRAM DATES AND LOCATIONS
                    For your convenience, the exams are offered on every business day of the week.

                    You may request to schedule your exams at any time. There is no advantage to taking
                    your exams on any particular date. Questions within exams are drawn from a large
                    database of questions and are administered randomly, creating thousands of unique
                    exam forms, all of comparable difficulty.

                    PRMIA uses the services of VUE, part of the Pearson Publishing family, to administer
                    the PRM exams. Pearson VUE is a professional testing firm that has nearly 4,000 testing
                    centers in more than 140 countries around the world.

                    Candidates have two years to pass all required exams of the PRM program.
                    You have up to two years to pass the required exams. Candidates may take exams over
                    more than a two-year period, but any exams passed more than two years in the past will
                    need to be retaken.

                    Please note some important details about registration, cancellation, identification
                    requirements and space availability in the Registration section found on page seven.




    www.PRMIA.org



6                                                                            PROGRAM DATES AND LOCATIONS
    FEES AND REGISTRATION
    FEES
    The program allows for you to take one, two, three or all four exams at the same time.
    Payment by credit card is required for online purchases. If you would like to make alterna-
    tive arrangements, please contact certification@prmia.org.
                                       SUSTAINING MEMBERS             FREE MEMBERS
    Any one exam                       US $175.50                     US $195
    Full program in one sitting        US $450                        US $500

    * Additional discounts are available for Sustaining Members who are also full-time students or
    reside in select low income countries.

    Full Sustaining Memberships are US$125 annually; Sustaining Memberships
    for full-time students and/or individuals residing in select low-income
    countries are US$50 annually. You can become a Sustaining Member online
    at http://prmia.org/index.php?page=membership.

    If you are interested in adopting the PRM as a corporate program, please contact
    certification@prmia.org. Special pricing on exam vouchers and preparatory materials
    may be available to your company.

    REGISTRATION
    Registration for the PRM is handled using our online form at
    http://prmia.org/index.php?page=exam&option=trainingFeesRegistration

    When you register, voucher number(s) will be provided to you that you can use to sched-
    ule your exam at the center, date and time of your choice. Once you have obtained your
    voucher please visit www.pearsonvue.com/prmia and follow the instructions on how to
    create an account, select your testing center online or for phone numbers where you can
    be assisted by a representative of Pearson VUE.

    Please be certain to have your PRMIA username available and to enter it correctly when
    registering with VUE. Your exam results will be provided to that username via the PRMIA
    website. It is your responsibility to ensure that your PRMIA username is entered correctly
    when registering with Pearson VUE. Failure to do so may result in a delay of exam results
    being reported to you or misreporting of exam results to another member.

    Please note that you may only take the same exam once every ninety days. If you repeat
    the exam before ninety days have passed, your second score will not count and you will
    be charged the full fee for both exams.

    Please note that all vouchers used to schedule exams have an expiration date. Should you
    attempt to schedule or reschedule to a date beyond the expiration date of your voucher, it
    will not be accepted by Pearson VUE. You may contact certification@prmia.org for a new
    voucher number, which will be provided to you without charge, subject to the condition
    that the request is made within one year of the expiration date. After one year has passed
    since the expiration date of the voucher, no replacements will be made.

    Candidates have two years to pass all required exams of the PRM program.
    You have up to two years to pass the required exams. Candidates may take exams over
    more than a two-year period, but any exams passed more than two years in the past will
    need to be retaken.
                                                                                                     www.PRMIA.org



FEES AND REGISTRATION                                                                                                7
                    TAKING THE PRM EXAM
                    PERSONAL IDENTIFICATION
                    On the date of your appointment, arrive at the testing center at least 15 minutes before
                    the scheduled start time. You must bring two forms of identification with you. The first
                    must be a current government-issued ID with your photograph and signature.

                     Examples of Acceptable Forms        Examples of Acceptable         Examples of Unacceptable
                       of Government Issued ID          Forms of Supplemental ID              Forms of ID
                      I   DRIVER’S LICENSE I PASSPORT           I CREDIT CARD                   I LIBRARY CARD
                           I NATIONAL IDENTITY CARD
                                                           I   EMPLOYEE ID CARD           I   SOCIAL SECURITY CARD
                                 I MILITARY ID




                    EXAM FORMAT
                    The exams are computer-based. You will not receive any copies of the questions. No
                    paper may be brought into the testing center, however, you will be provided with an
                    erasable board upon request.

                    Once admitted to the testing room, there will be a tutorial that introduces the functionality
                    of the exam and a brief message from PRMIA. After this has been viewed, you may begin
                    your exam. You will be asked multiple-choice questions, varying in quantity by exam.


                    Exam        Exam Name                                    No. of Questions        Time Allowed

                          I     Finance Theory, Financial Instruments              36                   2 hours
                                and Markets

                       II       Mathematical Foundations of Risk                   24                   2 hours
                                Measurement

                      III       Risk Management Practices                          36                   1.5 hours

                      IV        Case Studies; Standards: Governance,               24                    1 hour
                                Best Practices and Ethics

                    If you take the full exam, it is broken into a three-and-one-half-hour section, covering
                    Exams I and II, then a two hour section for Exams III and IV. There is an optional break of
                    one hour after the first section. Once you have started your break you will not be able to
                    return to those questions. Following the break, you will have two hours to complete the
                    remaining two sections of the exam. Allowed times include the time spent on the tutorial,
                    thus the lesser time allocated when full exams are scheduled.

                    The testing system allows you to mark and review questions as long as time is remaining.
                    Please note that you are unlikely to finish your exams with substantial extra time. You are
                    encouraged to use the tutorial in an expedient manner, but sufficient time is allocated for
                    you to complete the tutorial and each exam.




    www.PRMIA.org



8                                                                                                TAKING THE PRM EXAM
    CALCULATORS
    An online scientific calculator is part of the testing
    computer. It is the same scientific calculator that is
    available with Windows operating systems. If you use the
    Windows calculator on your computer, but it is not set to
    default to the scientific version, click “View,” then select
    “Scientific” to change default formats. We strongly
    recommend that you familiarize yourself with this
    calculator before arriving at the testing center.


    ARRIVE ON TIME
    It is very important that you leave enough time to arrive at the testing center early.
    Candidates that arrive late to the test center may not be permitted to test. The full charge
    for the exam will be made if you are not admitted for any reason. As these centers offer
    exams for other organizations as well, not everyone in the room will be taking the same
    exam, so no assumptions should be made about when other candidates enter or leave
    the testing center.

    Each testing center has an administrator who can assist candidates with any questions
    that they may have. All exam rooms are videotaped and monitored via a parabolic mirror
    by a proctor.


    EXAM RESULTS
    Your exam results should be available within 15 business days of your test date and will
    be delivered to you via the PRMIA website.


    CANCELLATIONS/CHANGES
    In recognition of the busy and changing schedules of risk managers, you may change
    your exam appointment without charge through the Pearson VUE system at
    www.pearsonvue.com/prmia. Please note that all change requests must be made at least
    one business day before the testing date or the entire exam fee will be forfeited.

    Please note that all vouchers used to schedule exams have an expiration date. Should
    you attempt to reschedule to a date beyond the expiration date of your voucher, you may
    contact certification@prmia.org for a new voucher number, which will be provided to you
    without charge, subject to the condition that the request is made within one year of the
    expiration date. After one year has passed since the expiration date of the voucher, no
    replacements will be made.

    Because of the flexibility in rescheduling, exam fees are non-refundable.




                                                                                                   www.PRMIA.org



TAKING THE PRM EXAM                                                                                                9
                 PRM SYLLABUS
                 The subject matter of the PRM program is broken down broadly as:

                  Exam      Topic                                                               Weighting
                    I       Finance Theory, Financial Instruments and Markets                        30%
                    II      Mathematical Foundations of Risk Measurement                             20%
                    III     Risk Management Practices                                                30%
                    IV      Case Studies; Standards: Governance, Best Practices and Ethics           20%

                 The complete syllabus is outlined below, including the weighting of each section.


                 EXAM I – FINANCE THEORY, FINANCIAL INSTRUMENTS
                          AND MARKETS

                 FINANCE THEORY                                                                       36%
                    I Risk and Risk Aversion

                    I Portfolio Mathematics

                    I Capital Allocation

                    I The CAPM and Multifactor Models

                    I Basics of Capital Structure

                    I The Term Structure of Interest Rates

                    I Valuing Forward Contracts

                    I Basic Principles of Options Pricing




                 FINANCIAL INSTRUMENTS (DESCRIPTIVE AND PRICING KNOWLEDGE)                            36%
                    I General Characteristics of Bonds

                    I The Analysis of Bonds

                    I Futures and Forwards

                    I Swaps

                    I Vanilla Options

                    I Credit Derivatives

                    I Caps, Floors and Swaptions




                 MARKETS                                                                              28%
                    I The Structure of Financial Markets

                    I Money Markets

                    I Bond Markets

                    I Foreign Exchange Market

                    I Stock Markets

                    I Futures Markets

                    I The Structure of Commodities Markets

                    I Energy Markets




 www.PRMIA.org



10                                                                                              PRM SYLLABUS
    EXAM II – MATHEMATICAL FOUNDATIONS OF RISK MEASUREMENT

    FOUNDATIONS                                                    4%
       I Symbols and Rules

       I Sequences and Series

       I Exponents and Logarithms

       I Equations and Inequalities

       I Functions and Graphs




    DESCRIPTIVE STATISTICS                                         8%
       I Data

       I The Moments of a Distribution

       I Measures of Location or Central Tendency

       I Measures of Dispersion

       I Bivariate Data




    CALCULUS                                                       21%
       I Differential Calculus

       I Higher-Order Derivatives

       I Financial Applications of Second Derivatives

       I Differentiating a Function of More than One Variable

       I Integral Calculus

       I Optimization




    LINEAR MATHEMATICS AND MATRIX ALGEBRA                          21%
       I Matrix Algebra

       I Application of Matrix Algebra to Portfolio Construction

       I Quadratic Forms

       I Cholesky Decomposition

       I Eigenvalues and Eigenvectors




    PROBABILITY THEORY IN FINANCE                                  25%
       I Definitions and Rules

       I Probability Distributions

       I Joint Distributions

       I Specific Probability Distributions




    REGRESSION ANALYSIS IN FINANCE                                 13%
       I Simple Linear Regression

       I Multiple Linear Regression

       I Evaluating the Regression Model

       I Confidence Intervals

       I Hypothesis Testing

       I Prediction

       I Breakdown of OLS Assumptions

       I Random Walks and Mean Reversions

       I Maximum Likelihood Estimation




    NUMERICAL METHODS                                              8%
      I Solving (Non-differential) Equations

      I Numerical Optimization
                                                                         www.PRMIA.org
      I Numerical Methods for Valuing Options




PRM SYLLABUS                                                                             11
                 EXAM III – RISK MANAGEMENT PRACTICES

                 MARKET RISK                                                    33%
                    I Market Risk Management

                    I Introduction to Value-at-Risk Models

                    I Advanced Value-at-Risk Models

                    I Stress Testing




                 CREDIT RISK                                                    50%
                    I Credit Risk Management

                    I Foundations of Credit Risk Modeling

                    I Credit Exposure

                    I Default and Credit Migration

                    I Portfolio Models of Credit Loss

                    I Credit Risk Capital Calculation




                 OPERATIONAL RISK                                               17%
                    I The Operational Risk Management Framework

                    I Operational Risk Process Models

                    I Operational Value-at-Risk




                 EXAM IV – CASE STUDIES AND STANDARDS: GOVERNANCE,
                           BEST PRACTICES AND ETHICS

                 CASE STUDIES                                                   63%
                    I Barings

                    I NAB-FX Options

                    I Bankgesellscaft Berlin

                    I Riggs Bank

                    I Continental Illinois/ Penn Square

                    I Credit Lyonnais

                    I US S&L Crisis

                    I LTCM

                    I Bankers Trust

                    I Orange County

                    I Daiwa

                    I California Power Crisis

                    I Metallgesellschaft

                    I World Com




                 STANDARDS: GOVERNANCE, BEST PRACTICES, ETHICS                  37%
                    I PRMIA Governance Principles

                    I PRMIA Standards of Best Practice, Conduct and Ethics

                    I Group of Thirty Derivatives Best Practices




 www.PRMIA.org



12                                                                           PRM SYLLABUS
    PREPARING FOR THE PRM EXAM
    Practicing risk managers are already preparing for the exams by going to work each day
    where they interact with other professionals and read industry magazines, software
    manuals, company policies and procedures, academic journals, websites and regulatory
    notices. They attend risk committee meetings, prepare risk reports, give presentations and
    write papers. They attend PRMIA chapter meetings, participate in on-line forums and attend
    risk management conferences. All of these activities prepare candidates for the PRM exams.


    RECOMMENDED READING
    The Professional Risk Managers’ Handbook: A Comprehensive Guide to Current Theory and Best
    Practices is the recommended reading material for candidates preparing for the exams of the
    PRM certification program.

    This Handbook covers all of the syllabus items for Exams I, II and III, while free web-based
    resources for Exam IV are available at
    http://prmia.org/index.php?page=exam&option=trainingWebBasedResource
    Purchase your Handbook at
    http://prmia.org/index.php?page=training&option=trainingHandbook

    GUIDED STUDY
    The ICMA Centre, University of Reading, is offering a complete
    personal learning training package for the PRM exams I, II, III and
    IV featuring leading faculty members like Carol Alexander, Jacques
    Pezier, Salih Neftci, Moorad Choudhry, John Board, and others.
    This access will not expire and is for your personal use on PC,
    laptop and the video can even be viewed on your iPod!

      I   Studio recorded lectures on DVD ROMs offer a high quality video with coordinated
          slides in the ICMA centre’s Interactive Learning Environment. Printed lecture notes are
          provided and the complete set, covering all four parts of the course, and has well over
          1500 slides.

      I   Sit back and watch Adobe Captivate demonstrations of Excel workbooks before you try
          them out yourself.

      I   Each lecture is accompanied by a set of fully worked examples that delve into more
          details about the essential PRM Handbook material.

      I   Test your knowledge of each chapter by taking multiple choice questions that are
          tailored to PRM exam requirements under exam conditions. Nearly 400 questions,
          with feedback, cover the whole PRM course.

    See http://prmia.org/index.php?page=exam&option=trainingLectures


    PRM DIAGNOSTIC EXAM
    You may need to brush up on your risk management theory or on those areas you might
    not yet have worked on. An online PRM Diagnostic Exam can be used to assess your cur-
    rent skills as they relate to the PRM Syllabus and/or as a practice exam prior to taking the
    PRM Exam(s). See http://prmia.org/index.php?page=exam&option=trainingBuyOnline

                                                                                                    www.PRMIA.org



PREPARING FOR THE PRM EXAM                                                                                          13
                                                           Alternatively, you can do a self-assess-
                                                           ment by looking at the exam content
                                                           outlines to identify the topics you may
                                                           need to study. We suggest the following
                                                           resources to prepare for the exams:




                 PRM SELF-STUDY GUIDE
                 This is a five-volume detailed study guide, produced by experts in the field. It encourages
                 a structured learning approach to PRM exam preparation, whether alone or in self-study
                 groups. The guide is free of charge and available from the PRMIA site at
                 http://prmia.org/index.php?page=exam&option=trainingCertification

                 The study guide is ordered by exam and provides advice and motivation on examination
                 techniques including a considered approach to modular multiple-choice timed exams. It
                 provides assistance in studying for the examinations, especially in the timing and
                 ordering of study, key facts of knowledge, the ease of obtaining the study text reference
                 and practice with worked examples. To help candidates test their knowledge, 40 sample
                 test questions are provided with answers given at the end.

                 ONLINE PRM TRAINING COURSES
                 Online training courses designed specially for the PRM exams are accessible through
                 the PRMIA web site. These courses have been developed and are administered by
                 third parties. You may find these to be very helpful supplements to your study
                 program. You can learn more about these courses at
                 http://prmia.org/index.php?page=exam&option=trainingBuyOnlineEprm


                 PRM TRAINING COURSES
                 Various universities and training companies are offering review courses for the PRM
                 program. They have submitted their programs to our Education Committee to ensure
                 that the subject matter matches the PRM syllabus. You can view them at:
                 University-based Courses: http://prmia.org/index.php?page=exam&option=trainingUniversity
                 Private Sector Courses: http://prmia.org/index.php?page=exam&option=trainingPrivate

                 PRMIA CHAPTER MEETINGS
                 PRMIA has regional chapters around the world that host regular meetings on current risk
                 management topics. The speakers are leading industry figures from banks, exchanges,
                 regulators, academia, consultants, vendors, asset managers etc. The meetings are open
                 to all PRMIA members, and constitute an excellent opportunity for professionals to stay
                 informed of the latest developments in risk management and measurement.


 www.PRMIA.org



14                                                                            PREPARING FOR THE PRM EXAM
    FREQUENTLY ASKED QUESTIONS
    Q: What is required to receive the PRM designation?
    A: Candidates must demonstrate sufficient knowledge and understanding of the building
       blocks essential for the successful practice of modern risk management by passing
       exams in four specific areas. In addition, they must commit to uphold the highest
       professional and ethical standards as defined by the PRMIA Standards of Best
       Practice, Conduct and Ethics.


    Q: I’ve looked at some other designations in risk management, what are the reasons
       why so many people are choosing the PRM?
    A: Here are ten reasons why:

        REASON 1: ENDORSED BY LEADING UNIVERSITIES
        National University of Singapore Centre for Financial Engineering, The Hong Kong
        University of Science and Technology Masters of Science in Investment Management,
        The University of Toronto Risk Lab, The University of Reading ICMA Centre, Technical
        University of Munich - HVB-Institute for Mathematical Finance, the Macquarie
        University Applied Finance Center, Bahrain Institute of Banking and Finance, the
        RiskChina Research Center, the School of Information Management and Engineering
        at Shanghai University of Finance and Economics, the Statistics and Finance
        Department at University of Science and Technology of China, the School of
        Management and Economics and Laboratory of Knowledge Discovery and Data
        Analysis at Beijing Institute of Technology, and the International School of Software
        Engineering at Wuhan University and a consortium of faculty in Paris representing
        ESCP-EAP, HEC, Ecole Polytechnique, Sorbonne and Université Paris Dauphine have
        all announced their endorsement of the PRM certification program as the global stan-
        dard for risk management professionals.

        REASON 2: GLOBAL
        Candidates from more than 95 countries are actively pursuing the PRM, more than
        any other risk certification program. Global recognition means that the PRM is the
        world’s most portable risk management certification.

        REASON 3: ENDORSED BY LEADING BUSINESSES
        Many companies have put their brand names on the line by publicly endorsing the
        PRM exam. There are no such firms doing this publicly for any other risk manage-
        ment certification program that we know of.

        REASON 4: PREDICTIVE POWER
        Because the PRM is broken into four exams, each of which must be passed to
        attain the designation, you cannot use strength in one area, say Math or Finance, to
        cover weaknesses in other area, say Risk Management. Exams with one overall score
        cannot reliably validate each critical area of competence. This muddling creates
        uncertainty about whether the candidate does indeed have the broad knowledge and
        understanding that risk managers must bring to their job. The point of a certification
        program is to remove such uncertainty.

        REASON 5: THE PRM HANDBOOK
        Written by over 35 leading authors, the PRM Handbook is available anywhere in the
        world that has access to the Internet. It is currently used in over 105 countries, at 23 of
        the world’s 25 largest banks, at all ten of the world’s largest financial services companies
                                                                                                       www.PRMIA.org
        and is the core text for a growing number of graduate programs in risk management.



FREQUENTLY ASKED QUESTIONS                                                                                         15
                     REASON 6: FLEXIBLE
                     Risk managers’ schedules are far from predictable, so you can take PRM exams any
                     business day of the year and in any order you wish. If last minute issues arise, you
                     can reschedule your exam without a charge.

                     REASON 7: RECOGNITION OF OTHER ACHIEVEMENTS
                     We provide partial credit to those that have demonstrated their skills through
                     attaining designations like the CFA, FSA, ASA and others.

                     REASON 8: NO MAINTENANCE FEES
                     Just because you are successful doesn’t mean that PRMIA should earn an annuity.
                     We will provide you with benefits as a successful PRM like training course discounts
                     and access to resources that are only for PRMs. You won’t need to pay us anything to
                     keep your designation active.

                     REASON 9: QUALITY
                     Because the PRM is delivered via computer, in controlled testing facilities, we are
                     able to monitor questions so that they truly reflect our syllabus and desired degree
                     of difficulty. In other words, our exam is designed, not just assembled.

                     REASON 10: RESPECT
                     The PRM is the most challenging certification program available for financial risk
                     managers. That’s why it is the only one to have been publicly endorsed by leading
                     universities and businesses. Holders of the PRM are easily distinguished for their
                     achievement and have the backing of PRMIA, the premier meeting place for the
                     risk profession.

                 Q: Between family and work, I don’t have time to prepare for lengthy exams.
                    Can you help me?
                 A: Of course. The PRM program is first and foremost designed to help you and the pro-
                    fession to advance. That’s our main goal. So, to help you with your busy schedule,
                    you can take the exams required at your pace, in any order, over a period of up to two
                    years. Individual exams vary in length from one to two hours, making them very easy
                    to fit into most business days.

                 Q: What are the exam dates?
                 A: You may take the exams on any business day. You may register for the time and date
                    or dates that are most convenient for you.

                 Q: What are the fees?
                 A: The program allows for you to take one, two, three or all four exams at the same
                    time. Payment by credit card is required for online purchases. If you would like to
                    make alternative arrangements, please contact certification@prmia.org.

                                                         SUSTAINING MEMBERS                  FREE MEMBERS
                     Any one exam                        US $175.50                          US $195
                     Full program in one sitting         US $450                             US $500
                 * Additional discounts are available for Sustaining Members who are also full-time students or
                 reside in select low income countries.

                 Full Sustaining Memberships are US$125 annually; Sustaining Memberships
                 for full-time students and/or individuals residing in select low-income
 www.PRMIA.org   countries are US$50 annually. You can become a Sustaining Member online
                 at http://prmia.org/index.php?page=membership.



16                                                                                FREQUENTLY ASKED QUESTIONS
           If you are interested in adopting the PRM as a corporate program, please contact
           certification@prmia.org. Special pricing on exam vouchers and preparatory materials
           may be available to your company.


    Q: Are group discounts available?
    A: Discounts are also available for companies or institutions that wish to enroll 10 or
       more candidates in any part of the program. The candidates need not sit at the same
       time, and your group will have up to one year to use the testing vouchers purchased.
       Contact our support team at certification@prmia.org to learn more.


    Q: Are there any prerequisites?
    A: Membership in PRMIA is the only prerequisite. Visit www.prmia.org to become
       a member.


    Q: What is the format of the exams and how long are they?
    A: The exams are all multiple choice questions. PRIMA’s computer-based method of
       delivery of the exams allows us to evaluate very specific details about each question
       administered, including down-to-the-second measurements of how long it takes most
       candidates to answer each question. Exams vary in length based on these validated
       testing times:




    Exam      Exam Name                                   No. of Questions    Time Allowed

     I        Finance Theory, Financial Instruments               36             2 hours
              and Markets

     II       Mathematical Foundations of Risk                    24             2 hours
              Measurement

     III      Risk Management Practices                           36            1.5 hours

     IV       Case Studies; Standards: Governance,                24             1 hour
              Best Practices and Ethics

              Complete PRM Exam                                   120           6.5 hours


    Q: I just want to learn, not to be certified. Is this still for me?
    A: Yes. There is no requirement that you complete all exams. If you want to improve
       your knowledge and understanding, or want to train your staff, pick and choose the
       areas that you think they should know and use our program to validate their success.
       All financial market participants benefit from a better understanding of risk manage-
       ment Case Studies. You might have your trading desk sit for Exam IV. Suppose some-
       one is applying for an entry level job in your department. You can have them take any
       one of the exams to determine how ready they are to become a risk manager. The
       goal of our program is to advance you and the profession.

                                                                                                 www.PRMIA.org



FREQUENTLY ASKED QUESTIONS                                                                                   17
                 Q: How do I register?
                 A: Registration is available online.
                    Go to http://prmia.org/index.php?page=exam&option=trainingFeesRegistration for
                    details. Spaces at the testing centers will be reserved on a first-come, first-served
                    basis, so you are encouraged to register as soon as possible.

                 Q: What is the expected pass rate?

                 A: Pass rates vary by exam with Exams I and III having the lowest pass rates (around
                    60%). Overall, the success rate of candidates attempting to attain the PRM is about
                    50%. Your chances of success will depend upon several factors including the knowl-
                    edge and experience you have as well as the rigor of your preparation progress.

                 Q: What is the passing grade?

                 A: Candidates must score 60% or higher on each individual exam to pass.

                 Q: Where can I take the exams?
                 A: The exams are offered in all over the world in secure, clean and convenient testing
                    centers. Visit www.pearsonvue.com/prmia/locate to find specific addresses of
                    testing centers.

                 Q: What are the security arrangements?
                 A: Candidates will be required to present two forms of official identification when
                    arriving at the test center. Candidates must sign-in and sign-out of the testing center.
                    No papers may be brought into the examination room. Many rooms are videotaped
                    during testing and all are monitored by a proctor using a parabolic mirror or other
                    viewing device.

                 Q: Can I bring a calculator or PDA into the exam?
                 A: You will not be allowed to bring anything into the testing room. An erasable board
                    will be provided to you by the testing center administrator upon request. An online
                    scientific calculator is part of the testing computer. It is the same scientific calculator
                    that is available with Windows operating systems. If you use the Windows calculator
                    on your computer, but it is not set to default to the scientific version, click “View,”
                    then select “Scientific” to change default formats. We strongly recommend that you
                    familiarize yourself with this calculator before arriving at the testing center.

                 Q: What designation is awarded to successful candidates?
                 A: With the awarding of the certificate, successful candidates become a Professional
                    Risk Manager, or PRM, and will have a limited license to use the PRM insignia on
                    business cards, resumes and CV’s.

                 Q: Do you recognize other designations?
                 A: Holders of the CFA, CQF, CIIA, CEFA, CAIA, Actuarial Fellow or Actuarial Associate
                    designations will receive partial credit towards the PRM designation. The credit
                    applied is based on the quality and challenge of materials covered in each of those
                    programs, the rigor of the testing versus that required for the PRM designation and
                    the ability to interpret results as being equivalent to the requirements of the PRM.
                    Details on which exams must be passed are available on page three of this guide.
 www.PRMIA.org



18                                                                             FREQUENTLY ASKED QUESTIONS
    Q: If I am successful, do I have to pay an annual fee to keep my designation?
    A: No. Some organizations want you to pay them for your achievement. PRMIA wants to
       encourage you to develop professionally and to attain the highest standard in the
       industry. PRMIA will give to you special discounts and special resources as a PRM.


    Q: Who has endorsed the PRM?

    A: The PRM program has received the endorsements of leading university programs and
       some of the leading firms in our business because it is simply a better test of skills
       and it is available to members in all parts of the world. No other program has
       received such public backing. You can also read the Testimonials and Case Studies of
       some successful PRMs.


    Q: I’m ready to register, what should I do?
    A: Go to http://prmia.org/index.php?page=exam&option=trainingFeesRegistration
       and book your place.




                                                                                                www.PRMIA.org



FREQUENTLY ASKED QUESTIONS                                                                                  19
T H E P R O F E S S I O N A L R I S K M A N A G E R S ’ I N T E R N AT I O N A L

A S S O C I AT I O N W A S F O U N D E D I N 2 0 0 2 A S A F R E E A N D

O P E N F O R U M P R O M O T I N G T H E H I G H E S T S TA N D A R D S

O F E D U C AT I O N , E T H I C S , A N D P R O F E S S I O N A L I S M

I N T H E G L O B A L P R A C T I C E O F R I S K M A N A G E M E N T.




                             www.PRMIA.org

				
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